With increasing digitization, it is correct to say that tech companies run the world and will continue doing so. The better the talent in the tech industry, the brighter the future of technology. However, the tech industry is transforming, especially concerning the distribution of tech talent. Several projections state a widening skills gap in the tech industry, meaning many jobs still need to be fulfilled. Tech talent development will therefore be crucial to ensuring the technology industry has proper stewards to guide the rest of the world into the future.
High IT Salaries
Inflation decreases the currency’s purchasing power, meaning you can buy fewer goods and services with the same amount. Due to inflation and the high cost of borrowing, many employees in the tech industry are asking for pay increases.
Inflation in the United States is at a 40-year high, which only highlights why, according to Mercer, over 40% of employers have received requests for salary increases.
According to human resources industry analyst Josh Bersin, inflation substantially impacts salaries: “Everyone I talk to is going through this re-evaluation, saying, ‘you know what, we’ve got to add more money. We’ve got to reset salaries more often to adjust.'”
In the IT industry, salaries are more of an issue than in other sectors. The highest-paid CEOs in the world are in the tech industry, including Elon Musk, Tim Cook and Robert Scaringe. Though most of their compensation is in stock options, they still take home millions of dollars in base salaries. These inflated salaries are also reflected in middle management and below. Therefore, when employees ask for higher wages to match inflation, it represents a much higher increase than jobs outside IT.
The Demand For Tech Talent
Since the Covid pandemic, IT has become an undeniably prominent engine for sustainability and growth in all industries. That has driven the demand for tech talent sky-high, and with increasing digitization, it will only rise.
If what some claim is true—that the demand for tech talent has increased by 50-60% in the past two to three years—then it would stand to reason that this demand has made things exceedingly challenging for technology leaders to manage their budgets due to the higher demands on their IT departments.
The massive layoffs in the tech industry have made it easier for smaller firms to access better talent. However, many of them still demand the same salaries or stock options.
Staff Augmentation And Outsourcing
Companies must find ways to avoid paying such high salaries and have smaller payroll budgets. A potential solution is to consider staff augmentation and outsourcing. These two approaches could significantly reduce these overblown IT salaries and cut costs.
On the other hand, there is increased competition for the best tech talent worldwide, so firms will save less than they did before. Another solution for CIOs may be staff augmentation, which offers companies several benefits.
Staff augmentation is an outsourcing strategy where companies hire staff temporarily to complete a project. The augmented staff is apprised of the company’s objectives and how to do their jobs to align the project and company goals.
Navigating the challenges of inflation and high salaries requires a comprehensive approach. In addition to staff augmentation and outsourcing, here are some actionable steps that business leaders can take to combat these issues.
• Review and adjust pricing strategies: Evaluate your pricing models and consider if they need to be adjusted to reflect the rising costs. Analyze the impact of inflation on your costs and margins, and make necessary changes to ensure profitability.
• Optimize operational efficiency: Look for opportunities to streamline processes, reduce waste and improve productivity. Embrace automation and technology to enhance operational efficiency and reduce reliance on a large workforce.
• Invest in employee training and development: Enhance the skills and capabilities of your existing workforce through training programs. By improving the expertise of your employees, you can optimize their productivity and reduce the need to hire additional staff.
• Implement cost-saving measures: Identify areas where expenses can be decreased without forfeiting quality or customer satisfaction. This could involve renegotiating contracts with suppliers, optimizing inventory management or exploring energy-saving initiatives to cut utility costs.
• Nurture a culture of innovation: Encourage employees to think creatively and find innovative solutions to business challenges. Embracing innovation can lead to process improvements, cost savings and competitive advantages that can help offset the impact of inflation.
• Diversify your supplier base: Relying on a single supplier can make your business vulnerable to price increases and supply chain disruptions. Diversify your supplier base to mitigate these risks and negotiate better terms and pricing.
• Enhance customer value and loyalty: Focus on delivering exceptional value to your customers to maintain their commitment and mitigate the impact of price increases. Provide personalized experiences, superior customer service and continuous product improvements.
• Seek strategic partnerships: Collaborate with other businesses or industry players to achieve economies of scale, share resources and reduce costs. Strategic alliances can also open new market opportunities and enhance your competitive position.
• Continuously evaluate and adjust: Regularly assess the efficiency of your tactics and make corrections as needed. Remain agile and receptive to changing market conditions, and be willing to adapt your business model to remain competitive.
By adopting a multifaceted approach and taking proactive steps, businesses can better navigate the challenges posed by inflation and high salaries while maintaining competitiveness and profitability.
What Is The Future Of Tech?
The future of technology undoubtedly depends on the talent that runs it. As companies move away from the old models and embrace staff augmentation and outsourcing more, I believe the talent in tech will change.
There must be an increase in tech talent development to meet the increasing demand, and staff augmentation and outsourcing can help bridge the skills gap. The tech sector’s future is the remote staff who can deliver quality work on projects.